HP to pay $108 million in penalties in international bribery scandal

The US Department of Justice said Hewlett-Packard Company based in California will pay $108 million in penalties after subsidiaries in Mexico, Russia and Poland were found to have paid bribes to win business contracts.

An international subsidiary of HP has agreed to plead guilty to violating the US Foreign Corrupt Practices Act and admit to its role in bribing Russian officials to secure a big contract. The US is also entering into criminal resolutions with HP subsidiaries in Poland and Mexico regarding contracts with Poland's national police agency and Mexico's state-owned petroleum company, said the DOJ.

The HP entities will pay a total of $77 million in criminal penalties and forfeiture related to those dealings. HP has also reached a deal with the US Securities and Exchange Commission that will cost it a further $31 million.

(Credit: Hewlett-Packard Company)The HP logo.

HP said it had cooperated with the investigations. The DOJ acknowledged HP's extensive cooperation and HP said it would set up compliance and reporting programs. HP noted the misconduct described in the settlement was limited to a small number of people who it no longer employs.

The DOJ said the HP subsidiaries created a slush fund for bribe payments and set up an intricate web of shell companies and bank accounts to launder money.

The Russian case dates back to 1999 when the government announced a $100 million project to automate the IT systems at the Office of the Prosecutor General of the Russian Federation.

Employees at HP Russia structured the deal to include a fund of several million dollars, part of which was intended as bribes for Russian officials, said the DOJ.